Jorge Rivadeneyra Díaz
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Opportunities Emerge in Times of Crisis

Mon, 01/11/2021 - 10:17

Q: What are the main needs of Queretaro’s manufacturing industries as they deal with the COVID-19 outbreak?

A: At this point, the entire manufacturing sector needs unity and through CANACINTRA we are working toward this goal in Queretaro. We helped industries to work together to open businesses closed at the height of the pandemic and later on, we coordinated efforts to implement sanitary protocols. Support among the industries is essential for us and we promote it through many different actions, including sharing information, databases, best practices and business opportunities. All of CANACINTRA’s industries have been working as a team.

Q: How has the state’s manufacturing sector recovered from the pandemic?

A: While some sectors have recovered 80-90 percent of their production capacity, most are operating at 50-60 percent. The biggest challenge is to help these sectors to use their entire installed capacity. This should be easy in theory as the installed capacity is already there. The state does not need to build its manufacturing capabilities. We already have the necessary companies and infrastructure, we just need to reactivate it.

At its worst, the COVID-19 pandemic cost Queretaro’s manufacturing sector between 40,000 and 50,000 jobs but we have now recovered between 20,000 and 25,000 of those. We still have not reached pre-pandemic levels but we are working vigorously to get there. Regarding exports, the local manufacturing industry benefited from support programs implemented in the US and the EU, which has helped the sector to remain at about 80 percent capacity.

Q: What actions should the local aerospace industry take to recover?

A: The aviation industry was one of the worst hit from the COVID-19 pandemic but it is also one of the most resilient. The sector has the means to recover and people still want to travel, so the aviation industry should recover. The sector needs a COVID-19 vaccine or an efficient treatment that makes individuals unafraid to travel again. The US recently released an alert warning its citizens against coming to Mexico because of the outbreak. We still do not have the proper conditions for recovery but once they emerge, the sector will rebound quickly. The aviation industry is one of the sectors more likely to recover easily from the pandemic once the conditions are met.

Q: What measures are companies implementing to protect their workers at this time?

A: Companies in the state have implemented highly sophisticated protocols beyond the use of face masks, disinfectant gel and maintaining social distancing. While those are the basis of all protective measures, companies have gone beyond by introducing phased schedules, prioritizing work-from-home schemes and automating some tasks. Protocols have become increasingly specialized, which has allowed plants to avoid contagions in situ. Most cases that have been identified have occurred outside the plant, either at home, through parties or religious ceremonies.

Q: Why is Queretaro in a good position to recover to pre-pandemic levels and continue attracting investment and companies?

A: Queretaro has already consolidated as an attractive destination for the aerospace industry and many others thanks to the Queretaro Intercontinental Airport (AIQ) and Universidad Aeroespacial de Querétaro (UNAQ). Having highly specialized industrial parks and workers gives us a significant advantage. The aerospace industry will be hit by cost pressures as demand for aircraft suddenly dropped. For that reason, the aerospace industry will be pressured to reduce its manufacturing costs. It is well-known that manufacturing in Mexico, particularly in Queretaro, is less expensive than in other locations. We already have all the necessary infrastructure and capabilities at a more competitive cost than other regions in the world.

Q: What support does manufacturing require from the state and federal governments?

A: Some countries developed programs that helped the industry protect their workforce and similar programs could help Mexican workers. If the government is unwilling to support the industry directly, supporting employment can help. It is also necessary for the government to reactivate the local economy. The general public needs to restart some past spending habits, such as buying cars and other goods, as well as travel. Governments in the US and Germany have implemented successful programs to reactivate the economy that local authorities could draw inspiration from. While the current administration wants to support the poor, at this time support for those who have lost their jobs would be helpful.

Subsidies and other support given directly to workers would be highly helpful for them and for companies until the industry fully recovers. At this point, primary industries have recovered to pre-pandemic levels but every other sector is facing trouble to reactivate their installed capacity.

Q: How is CANACINTRA helping to attract more investment to the state?

A: CANACINTRA has always been a strong promotor of Queretaro. Sadly, at this point, traveling is much harder so we had to halt some of our promotional trips. However, our online promotion efforts are fully functioning. We are receiving a small number of foreigners but a larger number of potential Mexican investors. Foreign investors paused their visits to the region but in 3Q20, we began to see a larger number of potential investors from Asia. Queretaro is highly attractive. Visitors only have to see our industry, universities, research centers, cities and local government to be convinced of the potential of the state.

Q: What actions are necessary from the industry and government to help the manufacturing sector recover to pre-pandemic levels?

A: The world needs either a COVID-19 vaccine or a treatment to fully recover. Without this, recovery will be hard. However, there are positive signs regarding the development of a vaccine and once it arrives it will help many economic sectors. The economy will also require support from the government. For instance, the US could benefit from a second stimulus round now that Joe Biden has been elected and the financial incentives applied in the US could also benefit Mexico.

At this point, our priority is to save local companies. Between 5 and 10 percent of companies in the state are facing a very hard time because of the crisis, so we need to save them at any cost. We have been supporting partnerships, sales and acquisitions to support them. We are also working to reactivate production chains. Without a doubt, 2020 has been the most complex year the industry has faced. Our goal is to reactivate the economy and recover jobs, businesses and markets. At this point, there is a broad economic crisis but every crisis generates opportunities. The industry has and will continue fighting to support our country. 

Photo by:   CANACINTRA